Should I take compensation?

By THIS IS MONEY
Updated:

 

When I changed jobs in 1990 I transferred my small (£2,000) work pension to a personal pension. On 1 August, 2000 the value of benefits was £8,910 and I have been offered an increase of 98.2% (£8,740) as redress since the advice I received 'did not meet the normal regulatory requirements.' I have a very legal-looking letter and form to sign to accept the offer. What do I do? RS, Plymouth

Linda Whitney says: Ray, you are one of several people who have e-mailed asking how to evaluate compensation offers. I have spoken to several independent financial advisors and there are none who are probably qualified to analyse these compensation offers and therefore most of them do not want to comment upon them.

But after speaking to several this seems to be the general picture: the regulators lay down the calculations to be used in these compensation offers so assuming the calculations are correct it is unlikely you would get much more by challenging the offer. You can ask the company to provide you with the calculations they have used and they are obliged to supply them but a proper check would require the services of an actuary who charge considerable sums in fees.

Therefore, if you feel the amount you have been offered is reasonable your best bet is probably to accept it. Only if the compensation is very large, eg over £50,000 is it likely to be worth checking in which case contact an actuary but check the fees before you agree to any work being done.

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